Who Do Employers Compete With For Labour?

The common assumption is that employers compete with each other for labour. This is true for the currently employed or recent graduates. They have to deliver a salary that reflects the level of work expected and what the workers themselves want from an employer. It’s a two way street despite what some lobbyists would have you believe.

This ignores the alternatives to the labour market that are available. These include working in the cash economy, payment in kind, living off benefits or from family support.

I’m not casting value judgments here – I’m simply saying that in order for an employment offer to be competitive it has to substantially exceed that available from WINZ or StudyLink.

No potential employee will care about you if you are offering a rubbish wage. They’ll clock in and clock out just as they should – you’re on a different planet if you think employers arbitrarily lowering wages and moving towards casualisation doesn’t have blowback in labour productivity trends.

One of the reasons employers are struggling to plug the mythical “skills gap” is they’re not offering wages that are competitive with alternatives on offer, primarily from the welfare budget.

If the labour market was functioning healthily, and entrepreneurs were creating lots of new jobs to replace those lost in the recession, going back to university for another degree would be a financially irresponsible decision.

Foregoing a $40,000 salary for another 2 years of StudyLink would be blatantly stupid. But in the current environment, part-time and casual employment is significantly more likely than full-time graduate employment in the field that you studied.

There is a funny idea that students go onto post-graduate study because they want to. That might be true for many.

But the reality is that without Studylink many students would starve. They can’t even get low-skill part-time jobs to help them through university because the low skill labour market has become a numbers game.

So returning to study is actually a way of earning an income and putting food on the table. Not all students receive parental support or have the connections to get decent summer jobs.

The great tragedy of this whole debacle is that my generation has a lot of resentment towards the baby boomers at the top.

We don’t want much – contrary to popular belief – but it really irritates me how myths like “word harder” or “just get a valuable skill” persist.

The mathematics mean that not only can most graduates not look forward to full-time graduate employment, they can’t look forward to any employment that justifies the direct costs and opportunity costs they’ve spent on their wonderful university education.

There are 175,000 people unemployed, over 300,000 on benefits of some sort and over 100,000 students receiving student allowance.

These numbers aren’t going down anytime soon. The time for action is now. Aggressive job creation policy is a must by making it far less risky to experiment and find patterns of sustainable specialisation and trade.

And no, training wages and eliminating employment rights are not what I mean by “making it far less risky”.